East Africa is the fastest growing region on the continent, with economic growth expected to expand by 5.6% this year, well above the continental average of 4.5% or South Africa’s 3.1%. Infrastructure project finance and development is therefore crucial for East Africa to reach its full potential. The region has demonstrated a strong ability to attract international interest and construction project finance, with many mega infrastructure construction projects currently underway in the region.
Examples of Construction Project Finance Sources:
Kenya’s Standard Gauge Railway (SGR)
This is a new rail system spanning between Mombasa and Nairobi, and is currently the most ambitious infrastructure project in the country. The 609km-long line is expected to cost US$3.6 billion, with China’s Exim Bank meeting 90% of the infrastructure project finance and the Kenyan government providing the remaining 10%. The SGR is a direct effort to connect East Africans and their economies, and in so, lower the cost of doing business, attract further foreign investment and construction project finance to further accelerate growth and development.
Jomo Kenyatta International Airport, Nairobi
Airports are a priority. In keeping with its position as its position as a major African gateway, Kenya is building a new terminal at Jomo Kenyatta International Airport in Nairobi, also known as ‘the Greenfield Terminal.’ The construction project finance is largely being met by the African Development Bank, at an estimated cost of $612 million. The terminal will span 178,000 msq and handle 20 million passengers a year.
Moi International Airport, Mombasa
In 2014, Kenya signed a US$66 million agreement with the French Development Agency for financing construction upgrades to Moi International Airport in Mombasa, which is a major entry point for tourists and business travellers, with an increasing number of airlines flying in directly from Europe.
The Grand Renaissance Dam, Ethiopia
Regional economic force, Ethiopia, is underway with some of the most ambitious infrastructure projects in Africa, with the Grand Renaissance Dam seen as a real flagship project. When completed in 2017, the dam will generate up to 6,000 megawatts of electricity and establish Ethiopia as a main exporter of hydroelectric power. The cost of the dam is almost US$5 billion and the construction project finance comes entirely from the Ethiopian government, with 80% of the infrastructure project finance funded from taxes and the 20% balance through bond offerings – an investment opportunity in the country for foreigners.
Light Rail Transit, Ethopia
In Addis Ababa, Ethiopia’s capital, the recently completed Light Rail Transit, the first electrified rail system in Africa, is a symbol of Ethiopia’s steady rise and modernisation. The construction project finance came from China’s Exim Bank, which provided 85% of the US $475 million required to complete the construction.
Uganda and Tanzania
In terms of financing construction projects, Uganda and Tanzania are also well underway with mega schemes. Over the next five years, through a range of commercial loans, Tanzania will inject US$14.2 billion into its rail network. The country has already signed investment agreements with China worth more than US$1 billion, which include the building of a satellite city to reduce overcrowding in the capital, Dar es Salaam.
The Karuma and Isimba Dams in Uganda
Uganda is financing construction with Chinese investment to build two hydro power plants – the 600 megawatt Karuma dam and the 188 megawatt Isimba dam. The government has signed an agreement with China’s Exim Bank for 85% of the estimated US$2 billion cost of financing construction the projects.
Further Information on Financing Construction Projects
You can find out more about the opportunities for financing construction projects in the region at The Big 5 Construct East Africa construction expo, which takes place between 2 – 4 November 2016 at the Kenyatta International Conference Centre in Kenya. This is the official exhibition of Kenya’s National Construction Authority (NCA) as part of the country’s first National Construction Week, and is the only exhibition endorsed and supported by the Kenyan Government.
Even though the NCA conference is subject to entry fees, The Big 5 workshops are free for attendees – there is a CPD-certified workshop on options for financing construction projects in the region, as well as a host of opportunities to network, source materials, services, machinery and see live product demonstrations.
Just pre-register for your fast-tracked entry into the show, where you can also network with the East Africa construction industry decision-makers, check out the latest in construction technology and techniques.